Educomp Solutions held a conference call to discuss third quarter results and future prospects. Mr Shantanu Prakash, Chairman & Managing Director, addressed the call.
Highlights of the call
- The management does not believe that it is in any way impacted by the slowdown in the economy and that its plans are on track.
- Educomp has maintained its full year guidance on consolidated basis, of revenues at Rs 550-580 crore and PAT at Rs 140-145 crore.
- For FY09, on standalone basis, the Company has guided for revenues at Rs 540-550 crore growth of 106-110% with PAT guidance of Rs 135-140 crore a growth of 92.7-100% over FY08. The EPS on diluted equity of Rs 18.30 crore works out to Rs 73.8-76.5.
- On the basis of the guidance, Q4FY09 would have revenues of Rs 227.18 – 237.18 crore up 92 – 101% and PAT would be Rs 61.29 – 66.29 crore up 95 – 111% on y-o-y basis.
- The MTM losses on translation of FCCBs net of money invested in deposits was at Rs 10.10 crore against Rs 12.1 crore in the sequential quarter.
- On consolidated basis, Cash/bank balances stood at Rs 255.30 crore and short-term investment of Rs 38.9 crore in Commercial Paper and Certificate of Deposit in Commercia Bank, San Jose. Debt stood at Rs 835.4 crore on consolidated basis: Rs 99.2 crore being on standalone books, FCCBs Rs 380.30 crore, Educomp Infrastructure & School Management Rs 250 crore and Educomp Asia Pacific Pte Rs 104.5 crore. Debtors days are at 170 days on account of ICT business.
Smart Class
- For the quarter, the segment revenues grew 152% at Rs 87.59 crore contributing 60% of the net income with PBIT margins of 59.2% up 380bps and PBIT was up 170% at Rs 51.84 crore. For the nine months, the segment revenues grew 162% at Rs 203.40 crore contributing 65% of the revenues with PBIT margins of 60.1% up 450bps and PBIT was up 184% at Rs 122.16 crore.
- In Smart Class segment, the Company signed up 212 new schools: BOOT – 182 and Outright sale – 30 during the quarter. The total schools signed up at 1479 schools.
- The capex per classroom is about Rs 75000 – 80000 with the average number of classrooms per school at 26 for the quarter.
- For FY09, the Company has maintained guidance of cumulative number of schools at 1700.
- Of the smart class revenues, hardware sale is Rs 17.46 crore, BOOT is Rs 62.81 crore and export revenue were Rs 7.31 crore.
ICT Solutions
- For the quarter, the segment revenues grew 57% at Rs 37.51 crore contributing 26% of the sales with PBIT margins of 22.8% down 550bps and PBIT up 26% at Rs 8.56 crore. For the nine months, the segment revenues grew 49% at Rs 57.61 crore contributing 18% of the revenues with PBIT margins of 26.8% down 150bps and PBIT was up 41% at Rs 15.45 crore.
- During the quarter the company added 1055 schools: BOOT – 347 schools and Outright buy – 708 schools with the total at 9970 schools.
- For FY09, the Company is targeting 12000-15000 schools.
- For Outright sale, the margins are at 12% whereas including content it is 35%.
Retail & Consulting
- For the quarter, the segment revenues grew 82% at Rs 11.59 crore contributing 8% of the sales with PBIT margins at 35.3% down from 60.8% in the corresponding quarter previous year and PBIT was up 5% at Rs 4.09 crore.
- Of the revenues, Mathguru had revenues of Rs 2 crore, Roots-to-Wings had revenues of Rs 2.2 crore and Licensing, Retail and ETEN had revenues of Rs 6.5 crore.
- Roots-to-Wings surpassed its guidance with 105 schools signed up of which about 50-60 are operational. The Company had given guidance for 100 sign ups.
- On consolidated basis, the segment had revenues of Rs 55.9 crore up 228% and EBIT of Rs 7.4 crore up 25%.
K-12 Initiatives
- The K-12 subsidiaries, EduInfra and EduManage reported revenues of Rs 12.9 crore and profit of Rs 5.2 crore. For the nine months, the revenues were Rs 30 crore PAT of Rs 14.3 crore. Educomp’s stake is 69.38%.
- The Company has 11 schools operational of which the Company owns 7 schools. The total students are at 14000+ of which owned schools have 3500 students. By 2012, the company expects to start 150 schools. The capex per school is Rs 12-13 crore.
- 6 schools, 1 each in Lucknow, Noida, Panipat, Amritsar and 2 in Chennai (Porur and DLF-OMR) are under construction. Admissions process has already begun in Panipat, Amritsar and Chennai.
- 3 schools under Takshila Management Services (JV) are in construction phase in Hoshiarpur, Gaya and Ahmednagar. Moreover, agreements for 5 additional schools on Dry Management basis have been signed by EuroKids India, in which Educomp has 50% holding by June 2009.
- EuroKids runs 400+ schools and caters to 25000+ kids. 28 pre-schools are owned b EuroKids. Company is in the process of making IPR registrations in Middle East and South East Asia for pre-schools.
- EuroKids reported revenues of Rs 5.4 crore and PAT of Rs 3 lakh for the quarter (October 15, 2008 – December 31, 2008)
Others
- Learning.com had revenues of Rs 16.4 crore with PAT of Rs 1.6 crore and 9MFY09 (since May 16, 2008) had revenues of Rs 37.6 crore and PAT of Rs 7.3 crore. Educomp’s stake is 57.1% and on fully diluted basis 51%.
- Ask n Learn Inc had revenues of Rs 6.6 crore with EBITDA of Rs 1.5 crore and for 9MFY09 had revenues of Rs 18.2 crore and EBITDA of Rs 2.9 crore. Educomp’s stake is 100%. The Company has presence in over 140 schools in Singapore, Brunei and Indonesia.
- In the Raffles JV, the company has already signed lease agreements for 2 colleges one each in Delhi and Bangalore and would be getting the Raffles College in Mumbai into the JV. The schools are expected to be operational by the next academic year.